1. There are two agents who live for two periods. In the first period, each agent has $100 in income and they have no income in the second period. In order to secure some consumption for the second period, the agents have to invest part of their first period income in a risk-free security.
2. The risk-free security provides a certain payoff of 4%.
3. Agent 1 and Agent 2 invest $30 and $40 in the risk-free security.
4. The utility function of the investor isU(C) =ln(C) over consumption.
5. a) Find the subjective discount factor () of the agents.
6. b) Comment on the patience of these agents based on their saving behavior and subjective discount factor.